What Is a Charity Trust?

A charity trust is one of the recognised legal structures for running a charity in the UK. It’s governed by a trust deed and managed by trustees, who are legally responsible for ensuring the charity’s assets are used only for its intended purposes.

This guide explains what a charity trust is, how it works, its advantages and disadvantages, and how it compares to other types of charities.

What Is a Charity?

A charity is an organisation set up to carry out activities that benefit the public. To be legally recognised as a charity in the UK, it must:

• Have exclusively charitable purposes

• Exist to benefit the public

• Be registered with the Charity Commission (in England and Wales) if income exceeds £5,000

Charities can be structured as charitable incorporated organisations (CIOs), charitable companies, unincorporated associations, or charitable trusts.

What Is a Charity Trust?

A charity trust is a legal arrangement where trustees manage assets or funds on behalf of a charitable purpose. It’s established using a legal document known as a trust deed, which outlines:

• The charity’s purpose

• How it will operate

• How the funds or property should be used

• Who the trustees are and their responsibilities

Charity trusts are unincorporated, meaning they don’t have a separate legal identity. The trustees act on behalf of the charity in legal and financial matters.

What Are Charitable Purposes?

To qualify as a charity, a trust must exist for one or more charitable purposes, such as:

• The prevention or relief of poverty

• The advancement of education

• The advancement of religion

• The promotion of health

• The advancement of the arts, culture, heritage or science

• The protection of the environment

• The relief of those in need by reason of youth, age, ill-health or disability

These purposes must benefit the public, either generally or a sufficient section of it.

What Are the Advantages of a Charity Trust?

• Simplicity – Charity trusts are relatively easy to set up and run.

• Focus on asset management – They’re well-suited to holding and distributing funds, making grants or managing property.

• No need to register with Companies House – Only registration with the Charity Commission is required.

• Suitable for long-term giving – They work well for donors who want to set up a legacy or endowment.

What Are the Disadvantages of a Charity Trust?

• No legal identity – Trustees are personally responsible for contracts and liabilities.

• Limited flexibility – Trust deeds are more difficult to change than constitutions of other charity types.

• Not ideal for operational charities – If the charity employs staff or runs large projects, other structures like a CIO may be more appropriate.

• More burdensome for trustees – Trustees carry more legal risk in an unincorporated trust.

Examples of Charity Trusts in the UK

1. The Wellcome Trust – A major charitable foundation focused on health research, one of the UK’s largest charity trusts.

2. The Wolfson Foundation – Supports excellence in science, medicine, health, education and the arts.

3. Garfield Weston Foundation – A family-founded charitable trust that makes grants to UK charities.

4. Esmée Fairbairn Foundation – Provides funding to charities working in arts, environment, social change and education.

These trusts often make grants to other charities or fund specific research or projects rather than delivering services directly.

Final Thoughts

A charity trust is a useful legal structure if your goal is to manage assets, distribute grants, or leave a legacy. It’s ideal for charitable giving or long-term investment in good causes, but less suited for operational or service-based charities.

Trustees have greater legal responsibility, so it’s important to choose people who understand the role and are committed to the charity’s mission. If you’re unsure whether a charity trust is right for your aims, speak to a solicitor or consult the Charity Commission’s guidance on charity structures.